$A at US72¢ slams foreign earners

The benchmark index lost ground yesterday as the dollar's relentless rise put pressure on News Corp and the resource sector, and bank stocks continued to slide.

The S&P/ASX 200 stair-stepped its way down to finish at 3201.8, near its low for the day and 15.9 points below Thursday's close.

This followed a weak lead from Wall Street, where the blue-chip Dow Jones Industrial Average closed 10.89 points lower at 9837.94, though this compared well with a 57-point loss it was showing early in the session. The tech-heavy Nasdaq Composite lost 5.76 points to 1967.35.

On the local market, media giant News Corp dropped 34¢ to $12.20 and its preferred scrip fell 22¢ to $10.06.

On resource stocks, he said: "On the one hand, you have got strong demand that is going to be coming out of China and the rest of the world, and on the other hand you have got the increasing (Australian) dollar. It's going to be a bit of a juggling effort to see which one weighs up.

The big banks were all down, National Australia Bank by 25¢ to $29.63, Westpac 17¢ to $15.93, ANZ 18¢ to $16.32 and Commonwealth 8¢ to $27.63.

"I don't think there would be anyone out there in the investment community who didn't think we were going to have higher interest rates in the next 12 months," Mr Kaplan said. "It's quite ironic that it actually takes the first of what is inevitably a number of rises, even being a quarter of a per cent, for people to suddenly start getting nervous."

But he said investors would look favourably at the banks due to their attractive yields.

"They (yields) are looking closer to 6 per cent and we are not anticipating that we are going to get a massive rise in interest rates over a very short period," he said. "I think it will be a number of quarter-point rises over a one-to-two-year period. So I think the banks will still continue to be very profitable and do very well in that environment."

In retail, Coles Myer was down 3¢ at $7.61 and Woolworths dipped 2¢ to $11.02 while David Jones edged up 3¢ to $1.38.